Debt: High-yield leaps then stumbles

Mar 1, 2013

High-yield credits surfaced earlier than usual this year and dominated issuance in the first weeks of 2013, taking advantage of an uptick in risk appetite. But by February, sentiment had started to turn amid a pick-up in US Treasury yields – and several transactions were shelved

High-yield credits surfaced earlier than usual this year and
dominated issuance in the first weeks of 2013, taking advantage
of an uptick in risk appetite. But by February, sentiment had
started to turn amid a pick-up in US Treasury yields –
and several transactions were shelved.

In January, high-yield names in the Brazilian protein sector
were well received. Brazilian meatpacker
Marfrig was the first single-B credit to try
its luck in the international bond market with a $600 million
2017 issue. It increased the size of the deal from an expected
$300 to $500 million, after drawing $4 billion in demand. The
bond was priced to yield 9.875%, well inside the 11% to 12%
levels it was heard considering earlier.

Demand continued for B2/B+ rated Brazilian meatpacker
Minerva and B1/BB- JBS. Both
found solid demand and competitive pricing –
JBS’s $500 million deal even priced through its
curve.